We are working hard to ensure affordable financing – Whensu

The Microfinance subsector has reiterated its commitment to ensuring affordable financing to Micro Small and Medium Enterprises (MSMEs) especially those at the bottom of the pyramid with regards to access to funding and enhancement of financial inclusion. In this interview, Mr. Valentine Whensu, President, National Association of Microfinance Banks (NAMB), harps on the subsector’s effort toward alleviating financial exclusion and creating jobs.

Excerpt:

By Providence Emmanuel

2017 has gone far, do you think the micro-finance subsector is meeting up its target for the year?

The sector is basically out to take this country and the populace out of recession by providing affordable financing through the micro segment of the MSMEs, that is a major thing that we can achieve, because when people are financially independent, economic activities will improve and the economy will be better and then we will have more employment. The subsector is set to elevate people from financial exclusion and also to ensure we improve on the employment base via our services and help the people through micro insurance, ensure that they are insured and make them know that they have a life after today.

What is your reaction to the upsurge of Microfinance Banks (MfBs) in recent times?

It is a welcome development and we have to first establish the impact of financial institutions in this country to either know whether it is over-banked or under-banked. We will do that based on the indices of the development as it is now and also financial inclusion. As we speak now, we have 41.6 percent of the population that are financially excluded, according to EFinA. For us to take care of these people, it is the number of institutions we have in all the nooks and crannies of this country that would determine. About 61.9 percent are in the rural area, out of the 41.6 percent we are talking about. The more we have MfBs who are willing to go to rural areas, the more we can have people financially included, so I don’t think it is too much. If in the future Nigeria is ripe in terms of financial base, then the issue of merger and acquisition is likely to take effect. Exactly what happened to commercial banks, from 89 to 25 and to now they are 21. If you observe you would have seen more merchant banks are coming up, those who cannot meet up the MfB liecence are coming up with merchant banking. Initially we use to have two but now they are about four or five. The more institutions we have the better for us in the interim.

Development Bank of Nigeria, what do you think?

The Development Bank of Nigeria, DBN, was established basically to make funds available for MSMEs through the MfBs for on-lending to the MSMEs, they cannot go directly to these MSMEs, they are going to pass through the structure of MfBs and this is the value. The funding challenge we have been having would be a thing of the past because on its own, it was set up with $1.3billion and if such money can pass through MfBs, there would be funds or transaction, there would be fund to disburse to the MSMEs, economic activities will start to jump-start and there will be economic growth according to the target of the federal government.

DBN: MfBs should be given priority

By Providence Emmanuel

A Microfinance Bank operator, Ms. Bunmi Lawson, has called on stakeholders concerned with the disbursement of the $1.3 billion earmarked for Micro, Small and Medium Enterprises (MSMEs) pioneered by Development Bank of Nigeria to give priority to Microfinance Banks (MfBs) in the country. In a statement, Lawson who is the Chief Executive of Accion Microfinance Bank Limited, said that the sub-sector needs attention due to its peculiarity, adding that the call is imperative for the active poor so as to get funds for their small businesses and to ensure inclusive growth. She stated: “If more priority can be given to MfBs, the cost of loans to small-scale businesses would reduce. Only a few MfB which were able to secure funds from the CBN and BoI were lending at low interest rates to small businesses. “Small businesses cannot survive with high interest rates, the demise of many of these small businesses contributed to the current economic situation in the country,” she said. She pointed out that lower interest rates would quicken loan repayment by the active poor and hasten the opportunity for capital improvement. She also said, “the sector has almost gone into extinction because of the inability of most MfBs to lend to the active poor at single digit rates. In the past, the sector was able to do that, but now it is difficult because most of the MfBs secure funds from commercial banks. “Commercial banks lend between 25 and 28 per cent interest rate and it is difficult to secure such a loan at such a high rate and give it out to the active poor at a single digit,” she said.